Whereas brand manufacturers are rewarded by higher profit -- which can be reinvested into production facilities and quality control -- fewer financial incentives exist for generic manufacturers to maintain the same high quality standards that the FDA requires, according to Janet Woodcock, MD, director of the agency's Center for Drug Evaluation and Research, and Marta Wosinska, PhD, a senior economic adviser at the FDA.

Because generic manufacturers must compete on price to sell their products, their smaller profit margins discourage the same level of investment in quality control that branded drugmakers can make, the officials wrote online in Clinical Pharmacology and Therapeutics.

When production is interrupted by contamination or other quality issues because of facilities that are not highly specialized, assembly is halted and shortages ensue, Woodcock and Wosinka noted.

Failures in quality have not been an issue until recently, the authors asserted, because the drug supply in the U.S. traditionally has been "reliable." Buying behavior is likely driven by the assumption that quality is uniform among manufacturers, and that generics are "perfect substitutes" for brand versions.

If generics are viewed of equal quality, cost becomes a deciding factor for the customer. But, because of the lower profit margins on generic products, companies do not maintain facilities at the same level of quality as brand manufacturers, the officials argued. They indicated that FDA experience and interaction with stakeholders supported their conclusions.

For example, of the 900 abbreviated new drug applications for sterile injectables approved between 2000 and 2011, only 11, or 1%, had a backup facility if manufacturing was halted. By comparison, 20% of branded sterile-injectable applications had backup facilities.

"In the case of sterile injectables, there is very little margin for error, so a lack of sustained investment in infrastructure and vigilant quality focus can produce what economists term a 'bad market equilibrium,'" Woodcock and Wosinska wrote, "particularly the problem of reliability, in which quality problems are rife."

Other factors they cited were aging facilities, production lines crowded by manufacturers trying to produce various products, a lack of oversight over manufacturing subcontractors, and the economic downturn. The Medicare Modernization Act of 2005 was noted, too, as having a negative impact on profit after reimbursement rates were lowered substantially for generic sterile injectable drugs.

The authors cautioned that their conclusions focused on generic sterile injectable products, not oral and liquid products. Manufacturers are able to produce oral and liquid drugs with greater flexibility than the more facility-intensive sterile injectables, they explained.

In 2005, 61 drug shortages were reported to FDA, according to testimony at a 2011 congressional hearing. By 2010, shortages nearly tripled to 178, three-quarters of which were injectable drugs, which generally are made in smaller batches and are difficult to produce.

Responding to the shortages, the FDA said it had worked with industry to increase early notifications of potential shortages. In the 6 months prior to May 2012, shortages were reduced to 42 from 90 during the same period a year earlier.

Woodcock and Wosinska asserted that "we have now reached a point" for the FDA and marketplace to address manufacturing quality and shortfalls.

"Restaurant grades, HMO scorecards, or even a U.S. Pharmacopeia stamp on vitamins are just a few among many tools" that could be used as models, they advised.

But, they added, the marketplace would ultimately determine the price that buyers were willing to pay for quality products.

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